Enterprise and the State in Korea and Taiwan

Enterprise and the State in Korea and Taiwan

Enterprise and the State in Korea and Taiwan

Enterprise and the State in Korea and Taiwan

Synopsis

"In South Korea and Taiwan, public policy and private enterprise have collaborated to create post-war miracles of economic development. Karl J. Fields examines the institutions most important to the two success stories - powerful business groups and state bureaucracies. Drawing on extensive empirical research, Fields offers a new explanation for the similarities and differences in the organization of big business in two of East Asia's "mini-dragons."" "While huge family-owned conglomerates, the chaebol, have dominated Korean business, smaller guanxiqiye, interlocking family-based firms, have proved equally formidable in Taiwan. In his account of business-state relations, forms of financing, and the organization of trading companies in the two cases, Fields rejects both cultural-reductionist and rational choice explanations for differences between the two countries. He offers instead an innovative institutional approach that focuses on the complex linkages between social networks and political power." Title Summary field provided by Blackwell North America, Inc. All Rights Reserved

Excerpt

Contemporary economic theory is the study of how economic forces would interact if institutions did not exist; political economy is the study of how economic theory is actualized through institutions.

--Chalmers Johnson, 1988

Writing in 1791, Alexander Hamilton warned: "Capital is wayward and timid in lending itself to new undertakings, and the State ought to excite the confidence of capitalists, who are ever cautious and sagacious, by aiding them overcome the obstacles that lie in the way of all experiments." Hamilton thus acknowledges something recent generations of Western social scientists had nearly forgotten or chosen to ignore: institutions influence market outcomes.

All markets are embedded in an environment filled with a variety of institutions that compete for legitimacy and shape the incentive structure for all market participants. Although the caution and sagacity of Hamilton's capitalists may (or may not) be rational, the dominant neoclassical paradigm, with its atomistic and utilitarian biases, sheds only partial light on their actions. Entrepreneurs and their enterprises do not, and cannot, avoid the political, cultural, and communal institutions structuring their market transactions. This was just as true for Adam Smith's pinmaker as it is today for a German investment banker or a Hong Kong dress designer.

This book offers a timely and particularly appropriate test of the validity of this claim of "embedded enterprise." It examines developmental capitalism in the two most successful political economies to emerge in the postwar era: the Republic of Korea (Korea) and the Republic of China on Taiwan (Taiwan). More specifically, it analyzes the patterns of enterprise organization and the role of state and sociocultural institutions in shaping the most significant private economic organization in these two political economies: the private business group.

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